We have mentioned EZU (iShares MSCI EMU Index, Expense Ratio 0.50%) on several instances this week due to jolts in trading volume, presumably tied to anticipation of ECB action in regards to their awaited stimulus plan.
The ETF has had a strong year in terms of raising assets, pulling in >$650 million and bringing its asset base north of $8 billion. EZU seems to be the beneficiary of at least some outflows in VGK (Vanguard Europe, Expense Ratio 0.12%) which has seen >$400 million leave the fund via redemption in 2014, but this may seem like an insignificant amount given the funds $12.1 billion asset base as the largest “Europe Equity” focused ETF in the U.S. listed landscape.
Key differences between these two funds is that VGK includes the United Kingdom, in fact the U.K. makes up >32% of the underlying index, where EZU by design was constructed to track the EMU member countries (European Union), whom obviously use the Euro currency.
With no exposure to the U.K. obviously, France (>31.7%) and Germany (>27.5%) weigh in as the highest allocations in the fund, followed by the likes of Spain (>11.5%), Netherlands (>8.8%), Italy (>7.4%), and Belgium (>4.23%) among other EMU member countries.
From a market cap standpoint the fund is slanted towards “Mega” and “Large Caps,” which make up a collective >87% of the overall portfolio. Top weighted names in EZU are Total SA (3.34% weighting), Bayer AG (3.13%), Sanofi (2.89%), Banco Santander SA (2.75%), and Anheuser-Busch Inbev SA (2.40%), all clearly multi-national operators.
Notably, EWG (iShares MSCI Germany, Expense Ratio 0.51%) has a large presence in the Europe Equity space in terms of its heft, with about $5 billion in assets under management and ranking as the third largest fund in the
segment in terms of its AUM size.